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Monday, January 29, 2007

Why they are smashing online gambling.

As long as we know people have enjoyed a game of chance. They like to gamble. Some people prefer a game of skill like poker or a game of chance like roulette or the slot machines. All around the world there are casinos to attract gamers. And with the advent of the internet there is online gambling as well. I suppose there is online poker, online black jack, etc. I imagine that any gambling one can do in a casino now has a similar version online as well.

There is an assumption made by the moralistic that such activities are sinful. They waste resources. Well, so does government but the moralistic crowd seems to want it around -- in spades.

At the worst you can say that gambling is a vice. As Lysander Spooner wrote: “Vices are simply the errors which a man makes in his search after his own happiness. Unlike crimes, they imply no malice toward others, and no interference with their persons or property. In vices, the very essence of crime --- that is, the design to injure the person or property of another --- is wanting. It is a maxim of the law that there can be no crime without a criminal intent; that is, without the intent to invade the person or property of another. But no one ever practises a vice with any such criminal intent. He practises his vice for his own happiness solely, and not from any malice toward others.”

So what is behind the US governments attempt to police the world when it comes to internet gambling? Is is moralistic vice hunting? To some degree it probably is. The Bush regime is riddled with religious fanatics besotted with regulating man’s private morality. They don’t care whether an action is criminal or not. The mere fact that it is a vice is sufficient for them.

But that is not the major inspiration for this crackdown. Consider this; there are lotteries conducted by government across the United States. State governments promote gambling. They encourage people to take risks and they restrict competition so that they can give lousy returns on the investment. One’s chance of winning a lottery depends on how many prizes are given out. A lack of competition means less pressure to give out more prizes. It raises costs for consumers and reduces their chances of winning. And greedy politicians love it.

The government sells you a ticket for $2. They keep the $2. Out of the income from ticket sales they give out a fraction of the money in the form of prizes. And then they tax you for winning back from them. If you win $2 it is income worthy of taxation. If you lose $2, as you normally will, it is not a business expense. Your loses are entirely your own but your winnings you share with them. So they encourage gambling. To a large degree greedy politicians want to limit your ability to gamble because online gambling is unwanted competition for them.

But there are casinos all around the United States. So doesn’t that undermine that theory? No. First, why are their casinos all over the US. Only a few years ago they were few and far between even while lottery games run by government were all over the place. The competition arose when Indian reservations discovered they had the legal right to regulate gambling on their own land. They were immune from the anti-competition laws that governments set up to protect their monopolies on gambling.

And once the reservations had casinos it became absurd to continue restricting casinos elsewhere. The dam was cracked and water was escaping so better to allow them and tax them. The demise of gambling laws was a reluctant concession by politicians who found they really had no choice.

But if there are casinos all over the United States and if government itself is in the gambling business then why this fanatical drive to wipe out online gambling?

If you look at our previous post “The power to destroy” I make the point that government loves to tax. Politicians are greedy bastards even when they pretend to be generous. (Note that is always easy to be generous with stolen money and much harder to be generous with one’s own salary.) They want to get their hands on a good portion of even dollar that is ever spent.

It is their ability to grab other people’s money that gives them power and prestige. If you win a big sum at the casino it is reported to the greedy politicians. If you win the lottery your earnings are partially confiscated by them. What you spend within the borders of the United States belongs to them. If you spend $1 they may keep 10¢ of it for themselves. The recipient of the remaining 90¢ spends it and finds that the government now takes another 9¢ and so on and so on until the politicians are taken the full dollar.

Government taxes your winnings at the casino and it taxes the profits of the casino. If you win the governments gets some. If the casino wins the government gets some. They are the protection racket of the Mafia writ large with one difference -- the Mafia took less. But online gambling is another matter entirely.

The damn casino doesn’t physically exist anywhere. It is an online entity. It may be a company registered in some primitive place with low taxes like Switzerland. The people who provide the service of gambling are being allowed to keep most of what they earn. And that is what drives greedy politicians into such a frenzy.

The entire reason for smashing online gambling is greed. Politicians want to protect their revenue sources and online commerce is a threat to that.